Startup Review

It’s time to introduce a new feature to the blog: Startup review. When recruiters from startups send me unsolicited emails about joining their team, I will post my thoughts on the company’s business model. I won’t mention the company by name. If you are interested in the company, let me know, and I will put you in touch with the recruiter.

On Friday I heard from a recruiter who used the words “rocketship” and “disrupt” in the subject line. He pitched the company as “Visual Clubhouse.”

The concept here is that celebrities and influencers would teach synchronous classes via Zoom. People who bought access to the class would then be able to ask the presenter questions in real-time. So, for example, Kelley Deal could give an online workshop on knitting and making handbags, and long-time fans of The Breeders (such as myself) could pay money to attend via Zoom and ask Kelley about her favorite way to sew on a zipper. The celebrity/influencer would get 80% of the proceeds, and the start-up would get 20%. (I don’t think that either Kim nor Kelley have signed up for this platform. This is just a hypothetical example.)

There are some obvious upsides here. People love celebrities. People really want to interact with celebrities. If you look at the replies to tweets by celebrities – even in cases where the Twitter feed is obviously managed by a PR firm – there are a lot of people expressing their undying adoration and hoping for a response. Selling access to celebrities sounds like a good idea.

It’s an entirely virtual product; they’re selling an experience. This means that they don’t have to worry about supply chains, warehousing, and logistics. It also means that a customer doesn’t need to “use up” the items in a purchase before ordering more.

But let’s put the glitter of celebrity aside for a moment and think about the realities of this business model. From many years of experience in the online education business, I have some real concerns.

• Class size vs. interactivity vs. revenue. You need a small class size in order to offer meaningful interaction with the celebrity. You need a high price point to make money with a small class size. Are people willing to spend a lot of money to Zoom with a real celebrity? How happy are they going to be with the experience, as the celebrity’s time is going to be divided between the primary educational content and all the other participants. People are going to be very upset by tech glitches and other problems if they spent a lot of money.

• Quality of content. It is hard to put together good educational content that can be delivered over Zoom. If someone is going to pay big bucks, they’re probably going to expect high-quality content. You might have seen “Master Class” show up in your Facebook ads. Master Class (asynchronous) puts a lot of time and effort into producing the educational content. Once it’s done, they can keep selling it again and again and again. Not all celebrities and influencers are good teachers. If people are going to be paying more money than they do for watching Facebook Live or a YouTube video, they probably expect better quality content.

• Synchronous classes and schedules. YouTube is always there. If I want to watch a YouTube video about how to recharge the refrigerant in my car’s a/c system, I can do that any time of the day or night. I have a lot of options to choose from. If I don’t like one, I can try another. This startup’s model of synchronous classes means that no matter how much you hype a lesson, once it is over, it is over. Time zones are a huge issue; times that are convenient in California are not great in Europe. They’re even worse in India.

• Zoom. They are based on Zoom, a company that makes technical decisions such as having // appear in its UUIDs (which are sent as URL parameters to their API – they recommend double URL encoding).

• Churn. There is also going to be a fair amount of churn among both A-list celebrities and their fans. Barack Obama does not have time to teach a weekly course on constitutional law over Zoom. Let’s imagine that he does give a lesson in something via this platform. How many of his fans are going to be interested in paying a lot of money to learn something else from a different celebrity. In business-speak, I worry that customer acquisition costs will not stack up favorably against lifetime value.

• Moderation and customer behavior. If someone pays a lot of money to be in a real-time video chat with a celebrity, that person might feel empowered to say anything at all to the celebrity. I can assure you that someone is going to do something inappropriate at some point. Are celebrities going to want to moderate their own classrooms? Or will the startup need to provide human or AI class monitors? Zoom’s built in tools for moderating meetings are not up to this challenge. Maybe this startup is all stocked up on software engineers who are experts on AWS Kinesis and has a plan in place for AI content moderation in real time. However, the position that the recruiter was emailing me about was using Node.js and React, which is just general site-building stuff. (I’m actually mildly interested in why they are using React. I’m on a team that primarily uses a Node.js/React stack, and there are definitely drawbacks to React. We’ve moved some of our public-facing pages to something leaner because the heft of React was causing problems with our SEO.)

• Content drift. The startup is currently limiting itself to lessons being offered by top notch celebrities and plans to open things up later to run-of-the-mill influencers. At some point they are going to reach the point where one of the lessons is something along the lines of “Dita Von Teese teaches burlesque.” This sort of content is very popular, but once you get enough of it, your site is not going to be the place that people associate with “Barack Obama teaches constitutional law.” It’s also not going to help any issues that you have around moderating paricipants’ contributions. You’ll also end up with self-taught health and fitness influencers giving some really bad and dangerous advice.

• Content drift part II. From a business perspective, this sort of generally-popular content is probably a lot more profitable than specialty experiences. While there aren’t a lot of people who would pay to see the same lesson about the third amendment multiple times, there are probably a lot more people who would pay to see the same lesson about a particular burlesque technique multiple times. Esports athletes probably also have the cachet to offer the same synchronous lesson multiple times with high customer lifetime value. But at this point you move away from Neil deGrasse Tyson teaches awe-inspiring physics-stuff and more towards “OnlyFans with Zoom” or “Twitch with Zoom.” This makes money in the short-term, but there is a real risk that OnlyFans or Twitch will subsume this style of content delivery and then seriously cut into the audience for this startup.

The recruiter also dodged my question about the location of the job. I’ve reached a point where if my primary work location is not within bicycling distance of my home, then I am not interested. If the job can be done from inside my house? Even better.

Are you a recruiter for a company that wants an employee like me? Or do you want free publicity for your company when I write a blog post about your business model? Send me email! Be sure to include the primary work location and the compensation for the role in your email. Note that emails containing the terms .NET, ASP, C#, or Java will be routed directly to my spam filter.